S&P reviews Chesapeake Energy debt

S&P said it placed its B- first-lien and CCC+ second-lien senior secured debt and issue ratings of Chesapeake Energy Corp. on CreditWatch with positive implications.

The recovery ratings on the first-lien credit facility and first-lien second-out term loan facility remain 1, indicating an expectation of very high (90%-100%) recovery in the event of default. The recovery rating on the second-lien debt is 2, indicating an expectation of substantial (lower end of the 70%-90% range) recovery in the event of default.

The CC corporate credit rating, negative outlook and senior unsecured debt ratings are unaffected.

"The CreditWatch placement follows the announcement that Chesapeake has raised the size of its first-lien second-out term loan facility to $1.5 billion from $1 billion, resulting in improved liquidity and ability to address its 2017 and 2018 maturities and expected negative cash flows," S&P credit analyst Paul Harvey said in a news release.

"The additional liquidity will augment the benefits from the recent conveyance of the Barnett Shale Assets to Saddle Barnett Resources LLC, which should increase operating income between $200 million to $300 million per year through 2019 by eliminating related minimum volume commitment payments and reducing gathering, processing, and transportation costs for the company."

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